What is Fixed Income Style?

The Fixed Income Style Box provides a visual representation detailing a fund's credit quality and its sensitivity to interest rate fluctuations. It's a tool designed to offer insights into the risk associated with the bonds held in a fund.

The foundations of the Fixed Income Style Box are:

1. Interest-rate Sensitivity: This is denoted on the horizontal axis, signifying the average duration of all bonds within a fund's portfolio. It's grouped into:

• Limited (Short-term): These bond funds exhibit minimal influence from interest rate movements, resulting in lower volatility.
  
• Moderate: Bond funds in this category experience medium volatility and lie between the extremes of limited and extensive.
  
• Extensive: These are the most volatile bond funds due to their pronounced sensitivity to interest rate shifts.
  

2. Credit Quality: Presented on the vertical axis, it portrays the overall quality of the fund's bonds. This is also divided into three categories:

• High: Funds under this umbrella predominantly hold either government bonds or high-grade corporate bonds, reflecting a higher creditworthiness.
  
• Medium: These funds balance between high and low credit quality bonds, offering a middle-ground risk profile.
  
• Low: Often encompassing a significant portion of high-yield or "junk" bonds, funds in this category inherently carry higher risks.
  

The showcased image indicates an investment strategy favouring limited interest rate sensitivity (or short-term bonds) combined with a high credit quality.

• Related Articles

• What is the Equity style in the portfolio analyser report?

  The Equity Style Box is a visual tool, manifested as a nine-square grid, that offers insights into the investment styles of stocks and portfolios. By classifying holdings based on market capitalisation and investment styles, investors can better ...

• How to update the income range in FYERS?

  Updating your income range is paramount to ensuring your financial profile remains accurate and compliant with regulatory requirements. Follow these steps to update it in the FYERS account portal: Log in to My Account portal and navigate to "Manage ...

• How does the Tax P&L Report help with income tax filing?

  The Tax P&L Report assists with income tax filing by providing: Accurate Reporting: Detailed breakdown of profits and losses, ensuring all relevant information is included in your tax return. Compliance: Helps comply with tax regulations by ...

• Is the leverage fixed at 4x for all eligible stocks?

  While MTF offers up to 4x leverage, the actual ratio may vary among eligible stocks based on specific criteria like volatility and liquidity, ensuring a balanced risk approach. Detailed leverage information for each stock is available on the MTF ...

• What is Portfolio Analyzer Report?

  The purpose of the Portfolio Analyzer report is to analyze an investor’s portfolio and give insights based on different financial measures. For instance, you can determine the proportion of assets invested in different sectors, equity styles, or ...